More media stupidity on energy

With very few notable exceptions, it seems the British media is stuffed with hacks who exhibit no evidence of an enquiring mind, no willingness to question and test the stories they are being fed and no interest in publishing challenging pieces that readers need to be told, no matter how difficult the conclusion is for people to accept.

The Mail on Sunday has one of its increasingly half baked, cor blimey editorials today where is proclaims ‘We must sort out fuel prices… right now’. It doesn’t perform any real service to its readers because it doesn’t recognise and set out the real problems about energy prices.

At the most simplistic level, prices are rising for four reasons:

Increasing energy prices on the wholesale market are being passed on to customers by the regulated providers

Increasing government-imposed ‘green levies’ imposed to pay subsidies and grossly inflated tariffs to corporates and land owners for building and hosting inefficient and expensive wind turbines that are incapable of replacing the conventional energy generating capacity

Additional government-imposed levies designed to drive up the cost of energy in order to leave many people with no choice but to use less energy than they do now, regardless of how cold it may get in the winter

The regulated providers seeking to maintain a margin, which in the retail market is only around 5% profit, as reward for the good they provide

But you would never understand this from reading the Mail piece. Instead it adopts the economically illiterate position of the Archbishop of Canterbury – a man with a commercial background who should know better – which effectively calls for the energy providers to absorb the rising cost of energy themselves and provide it to people at cost, or even at a loss. The Mail barely touches on the significant impact of government policy.

Where is its 4 page spread examining the policy of using pricing as a means for forcing reduced energy use? Where is its editorial attacking the imposition of vast levies to install turbines at a cost of billions of pounds, which generate on an average less than 25% of their stated capacity – and where the guaranteed price for what little energy they produce offshore will be £155 per megawatt hour (MWh) and onshore is £110/MWh – falling to a still eye watering £135/MWh and £95/MWh respectively in a couple of years? That compares to a current guaranteed price for nuclear power of £48/MWh. Even that price is expected to almost double to around £90/MWh for new nuclear build as the government fritters away our money as it desperately tries to make up for outrageous strategic failure on new energy build over the last three decades.

What the Mail also fails to grasp, let alone report, is the disturbing fact that the structure of energy prices and what they are made up of is now so complex, not even the most savvy analyst can break down where the money we pay actually goes to.

There are so many impositions and elements in energy today that working out who the money is going to is virtually impossible. Which could explain why we see Scottish and Southern Energy declaring that the cost of energy has gone up 4% in the last year, while British Gas say it is 13% in the last year. The only way to achieve transparency in energy pricing is to start again from scratch and identify exactly what goes where. Then we could have some confidence in British Gas’ breakdown, shown below:

What is clear is that while there are pressures from government and consumers on energy companies to rein in their costs, no one seems to be connecting the dots about how government and regulation is driving up the wholesale costs to energy companies, how transmission charges are rising unchecked and how direct levies and taxes by government are also not subject to proper scrutiny or downward pressure.

Until a lot of light is cast on this and the government is called to account for its part in this – and forced to explain to people the global and EU dimensions to the vicious policy of forcing down demand through higher prices in the name of ‘sustainability’ – the cost of energy is going to continue to rise.

The lightweight intervention of Dr Justin Welby and the weak arsed commentary of the Mail achieves nothing and helps no one.

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12 Responses to “More media stupidity on energy”

Quite so, but then what can one expect of the journalists? we have today, with I must say one or two honourable exceptions. I notice no mention of the dreaded Article 21, a UN one I believe which calls for the “rich” Countries to ration energy, water and anything else they can think of to reduce our standard of living to third world levels. It seems to be working.

There was another article in the Mail a couple of days ago, also featuring a breakdown of the cost of energy. It included many Twitter comments directed at BG. Not one of them appeared to be aware of how little the companies profits contribute to the overall bill. Indeed, from your graphic, this (and their operating costs) have actually gone DOWN £5 in 4 years!

If you exclude the wholesale cost (which they have little control over) it’s the Green levies and distribution charges which have shot up. The latter includes infrastructure upgrades to connect widely spread “renewable” generating sites, which mostly wouldn’t be needed if a more rational energy policy was in place.

For once I am (almost) on the side of the suppliers, and I’m glad they are finally calling the government out over price increases.

The UN Agenda 21 type scenario is indeed an exercise in redistribution – that means people as well as wealth.

To achieve this involves massive movements of populations – we have sent billions to Africa to try to take the people there out of poverty, it hasn’t worked. The powers that be have decided that instead of moving wealth to the African people it is better to move the African people to the wealth in the developed countries.

Unfortunately this has advantages for both ends of the political spectrum in the UK – Labour welcomes mass immigration as it can harvest the votes of a new bottom class, the Conservatives just simply welcome new cheap labour.

The one overriding problem is that of resources – whether it be water, food, or energy, the people already here have to ration their share to accommodate the incoming hordes.

Climate scares are a handy way to distract what would be the obvious discontent of the indigenous masses.

The dishonesty of growing the ‘ditribution’ sector (red) when it should be attached to the ‘green’ sector is typical….. even the energy companies who profess to have reasons to complain about Government policies could stick the knife in still further by WIDENING the green segment to what it really should indicate.

Two articles which highlighted the rising cost of energy being due to interference by a dictatorial government and the need for utilities to pay dividends out of debt:

According to forecasts compiled by Bloomberg in May, it was reported that SSE will have a positive cash flow of 3.8pc however, it will pay a dividend yield of 5.38pc.

Milton Managers calculated that after all costs are taken into account, SSE would lose cash amounting to 4.5pc. In other words, it will pay its dividends out of borrowings, rather than from cash generated by the business – as it has since 2008.

“True cash flows to SSE shareholders have been negative since 2004 and as a result the company’s debt has risen relative to equity every year except 2011, when it raised money by issuing more shares.”

“Under powers granted by the Energy Bill, the Department of Energy & Climate Change (DECC) will give price guarantees to developers in those technologies and at those locations that it favours. The DECC will set the level of these guaranteed prices and thus determine how much money each asset makes, what the consumer pays and the returns on investment.

“The department will also decide how much reserve capacity is required to back up renewable power – and, by implication, the revenue and returns for much of the existing generation plant.

The Telegraph concluded that this amounted to the effective
re-nationalisation of the investment decision process in the power sector.”